revised version published in: European Journal of Law and Economics, 2006, 22, 49-71
This contribution investigates severance payments for dismissed employees in Germany.
Subsequent to an overview about the legal framework, we respond to the following
questions: Who receives severance payments? By which characteristics is the level of
severance payments determined? Is overcompensation to be considered a relevant issue?
Hereby, individual and collective dismissals are always distinguished. This is the first study
on this issue using individual representative data – the German Socio-Economic Panel – and
multivariate methods. The results indicate that rather women, persons with many years of
tenure and working in big firms receive severance payments. There is a huge variance in the
size of the payments, which can only partly be explained by tenure, the wage, firm size and
the region. At least one quarter of dismissed employees is better off in their following careers
independent of having received a severance payment.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.